A Solar Water Heater Purchase Could Be Worth the Investment

Solar water heaters, like other green technologies, come with a higher price tag but offer energy savings over the long term.

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A solar water heater sits on a rooftop in Brazil.

Lucas Ninno/Getty Images

Taking a hot shower can literally mean pouring money down the drain.

The average American household can spend between $53 and $70 per month using an electric water heater. If you spend a little extra time in the shower, that cost can pile up even higher. 

Turning down your water heater's temperature can save you some money on water heating costs, which account for 14% to 18% of your home's monthly energy budget, according to the Department of Energy. But replacing or supplementing your current water heater with a solar-powered water heater could, too.


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Solar water heaters harness the sun's energy to provide a sustainable solution for heating water in the home. While solar water heaters have gained immense popularity in countries where electricity costs are high, they've been slower to catch on in the United States, but could be a compelling option for cash-strapped Americans. 

Here's what you need to know about the ins and outs of solar water heaters and how you can use them to reduce your carbon footprint and save money.

What are solar water heaters and how do they work?

Solar water heaters vary in design, efficiency, capacity and price, but they all replace a good chunk of the gas or electricity used to heat water with clean, free sunlight. The three basic designs all have a way to collect heat, a tank to store hot water, backup heating for when your system can't keep up and a circulation system.

Batch collector water heater

Batch collector water heaters heat water in tubes or pipes, usually painted black to collect more of the sun's heat. Cold water can be mixed in periodically to keep water from getting too hot. These heaters are best suited for warmer climates. Where freezing might be an issue, they'll need to be drained during cold months to avoid damage to the system.

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Flat-plate collector water heater

Flat-plate collectors rely on a metal plate, often painted black, to soak up the sun's heat. Heat travels from the plate to water-filled tubes. The water cycles through heating tubes to and from the storage tank, keeping the stored water hot.

Evacuated tube collector water heater

Evacuated tube collectors are the most efficient models out there. Water is heated in a tube that's surrounded by a larger, vacuum-sealed glass tube. Very little heat is lost because there's no air between the heating liquid and the outside world.

Solar water heaters can heat water directly or indirectly. In indirect heaters, the sun heats a heat transfer liquid (often a water and propylene glycol mixture), which transfers its heat to water in a tank. Because the freezing point of the heat transfer liquid is lower than that of water, the system can operate in colder climates. For example, evacuated tube collectors can work in temperatures as low as minus 40 degrees Fahrenheit, according to the US Environmental Protection Agency.

How to buy a solar water heater

Buying a solar water heater is more complex than browsing an online marketplace like Amazon, selecting a water heater, paying and logging out, said Jake Edie, an adjunct professor at the University of Illinois in Chicago who teaches a course on clean energy in the electric grid. 

Much like other clean energy options, Edie says, solar water heaters require a substantial upfront investment in exchange for long-term gains and cost savings throughout their useful life span. 

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Solar water heater on a roof in Spain.

Jose A. Bernat Bacete/Getty Images

Here are some steps in purchasing a solar water heater system.

  • Assess your roof: Ensure your roof is in good condition and receives at least five hours of sunlight daily. 
  • Estimate the size of the heater needed: The size of your solar water heater depends on the number of people in your household and your location. Depending on how much sun you get, a 20-square-foot collector plate is recommended for two people, with an additional 8 to 14 square feet per person. The water tank should be 1.5 to 2 gallons per square foot of collector plate.
  • Check efficiency metrics: The solar energy factor and solar fraction of the system are the most important metrics to measure and understand a water heater's efficiency. A typical solar energy factor (the amount of power used from the sun divided by the power used from the grid) is between two and three, and a typical solar fraction (the amount of power used by the sun divided by all the power used by the system) falls between 0.5 and 0.75.
  • Estimate cost: Consider the system's initial cost, the potential maintenance costs and the savings from the federal tax credit for solar water heaters.
  • Get quotes from installers: Contact solar water heater installers for quotes and compare.
  • Purchase and wait for installation: Once you've decided, proceed with the purchase and set up a time for the installers to install your system.
  • Apply for tax credit: In the US, solar water heaters qualify for a 30% federal tax credit. Be sure to apply for this when you file your taxes.

Types of solar water heaters

When it comes to solar water heaters, there are two primary types: active solar water heating systems and passive solar water heating systems.

Active solar water heaters

Active solar water heaters use a pump to circulate the heated liquid and can be divided into two types: direct and indirect circulating systems. Active solar water heating systems are generally more expensive, but are the common type installed in the US, according to the EPA.

  • Direct circulating systems circulate water directly through solar collectors and are suitable for climates that don't experience freezing temperatures.
  • Indirect circulating systems circulate a non-freezing heat-transfer fluid through a heat exchanger that warms the water, making them ideal for environments prone to freezing. 

Passive solar water heaters

Passive solar water heaters don't have pumps to move hot and cold water around. They come in two distinct variations: integral collector-storage systems and thermosiphon systems. Passive solar water heaters are known for their reliability, cost-effectiveness and durability, but don't allow for some of the finer control of active systems.

  • Integral collector-storage systems heat water through a transparent cover on a storage tank from which water is drawn when a hot water tap is opened.
  • Thermosiphon systems heat water in a collector on the roof and use the fact that warm water will rise and cold water will sink to keep a flow of cooler water in the path of the sun's warming rays.

How much does a solar water heater cost?

The cost of a solar water heater can vary widely depending on the type, size and installation requirements. On average, you can expect to pay between $2,000 and $5,000 for the system, with installation costs adding $1,000 to $3,000. Despite the upfront costs, solar water heaters can provide savings over time through reduced energy bills.

In the United States, solar water heaters qualify for a federal tax credit, sitting at 30% of the total cost through the end of 2032. So for a system that costs $3,877, you would be eligible to receive back $1,163 when you file your taxes.

What are the pros and cons of solar water heaters?

Like any technology, solar powered water heaters have pros and cons.

Solar-powered water heaters are an excellent means to reduce your overall electricity expenses, but they come with challenges, Edie said. For instance, he talked about cloudy days or at night when solar panels can't generate power, which is when water heaters will be unable to produce hot water. 

Here's a further breakdown of the pros and cons.

Pros

  • Energy savings:Installing solar water heaters can help you save on your electric bill and reduce your reliance on municipal power for your hot water needs. 
  • Environmentally friendly:By harnessing the sun's energy, solar water heaters provide a sustainable energy solution that reduces your carbon footprint.
  • Long lifespan:Solar water heaters have a long lifespan and can last up to 20 years or more with proper maintenance.

Cons

  • Expensive: The upfront cost of installing a solar water heater can be high, although energy savings can offset this over time.
  • Weather dependent:Solar water heaters depend on sunlight to function. Cloudy or rainy weather may affect their performance, though pairing them with a conventional water heater can keep the hot water flowing even during a string of cloudy days.
  • Requires space: Solar water heaters need space on your home's roof to install solar panels. Small homes or shared apartment buildings may not be suitable.

Correction, Aug. 18: This story originally presented as direct quotations some statements that were actually paraphrases of what the cited individual had said. Those passages have now been rendered appropriately as paraphrases.

Article updated on Aug 19, 2023

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Chi Odogwu is a digital consultant, professor, and writer with over a decade of experience in finance and management consulting. He has a strong background in the private equity sector, having worked as a consultant at PwC and a research analyst at Renaissance Capital. Additionally, he has bylines in well-known publications, including Entrepreneur, Forbes, NextAdvisor, and CNET. He has also leveraged his writing talent to create educational email courses for his clients and ghostwritten op-eds published in top-tier publications such as Forbes, CoinDesk, CoinTelegraph, Insider, Decrypt, and Blockworks. In addition to his writing, education, and business pursuits, Chi hosts the top-rated Bulletproof Entrepreneur Podcast. Through this podcast, he engages in insightful conversations with talented individuals from various fields, allowing him to share a wealth of knowledge and inspiration with his listeners.
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